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Stumper 4 - Assignment Example

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The only difference is that the teacher’s answer uses a different approach and examples. My approach is how falling Fed Fund Rates increase the loanable funds by reducing the discount rate while…
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Stumper 4
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Stumper 4

Download file to see previous pages... My answer is also correct but it is not detailed to the lather. Both answers explain the effects of such situation in the short run. My answer gives general information while the teacher’s goes as far as categorizing the major economic components that face the full impacts. For instance, the teacher talks about the how businesses, households, commercial banks and the foreign exchange markets react to lower Fed Fund Rates. Nevertheless, both answers explain the result of the expansionary monetary policy that is enacted during trough phase of the business cycle.
In this question, both answers are correct though there slight difference in the explanations. Both answers focus on the long term effects of a strong expansionary policy and the resulting effects. Some of the effects discussed include price levels, aggregate demand, aggregate supply, inflation, rate of unemployment and Gross Domestic Product. In my own opinion, the assignment is ninety five percent ...Download file to see next pagesRead More
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